Fixed costs in the supply chain play a larger role in the prices of fruits and vegetables compared to those of other foods, raising the price by at least 40%, according to a new study.
Fruits and vegetables have particularly high fixed costs because they are perishable products that require more frequent replenishment, driving up the prices of these items.
According to researchers at the University of Warwick, higher prices lead consumers to buy on average 15% less fruit and vegetables than if they were sold at marginal cost.
Reports indicate that the 15% “under-consumption” of fruits and vegetables represents a third of the gap between the average amounts consumed and the recommended intake.
The researchers suggest that subsidizing fresh fruits and vegetables by up to 25% could counter price distortion, reduce the cost of fruit and increase consumer consumption by up to 15%.
In Britain, supermarkets are estimated to have sold around £10.4 billion ($13.7 billion) worth of fresh produce in 2017, with researchers estimating that funding a subsidy would cost the government £2.5 billion pounds per year.
Read more: UK supermarket prices rise at fastest pace since 2012 as inflation hits
Professor Thijs van Rens, one of the authors and leader of the Warwick Obesity Network, said: “The food retail market is very competitive, so if there were no fixed costs, you you would expect food to be sold at near marginal cost, and the fact that it is not affects diets.
“A higher price for any product means people buy less of it.
“Something wrong with the market is that there is a high fixed cost in sourcing fruit and vegetables. This has the effect that prices are too high and consumption too low.
He warned that demand was low in areas where the poorest people live. “So this market failure makes us all unhealthy, but it also increases health inequalities,” van Rens added.
Read more: Cost of living crisis: UK shop prices rise at fastest pace since 2011
It comes as prices in UK stores rose at the fastest pace in March since September 2011, adding to the cost of living crisis consumers are facing.
A study by the British Retail Consortium (BRC) suggests that the war in Ukraine and volatile commodity markets are fueling inflationary pressures.
This will “dampen” consumer confidence, the BRC said, warning that the full impact of rising costs remains to be seen.
Food inflation jumped to 3.3%, its highest rate since March 2013, while non-food inflation hit 1.5% in March, from 1.3% in February and its highest rate since February 2011.
Separate analysis showed UK supermarket prices rose at their fastest pace in nearly a decade this month as household budgets come under increased pressure and the cost of food crisis life gets worse.
Food price inflation hit 5.2% in the four weeks to March 20, the highest since April 2012, according to data analytics firm Kantar.
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